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Now things are going to start to get interesting in the world of petroleum. I know there are plenty of other factors involved in the prices of oil but one of the big ones (in my opinion) is china's subsidies of gas.
Today they went right back up, on news that the increase in prices could actually increase demand rather than decrease it. Isn't that backwards!
Inelastic demand products do not follow the conventional rules about supply / demand and pricing.
Prices have gone up here (the US) and the morons typically keep buying more.
The level of buying of gasoline here has only recently decreased due to a decline in business activity, as actual miles driven declined But the prices are still holding up.
If you want to get out of the game, you actually have to quit playing.
they keep buying more because they know where the dollar denominated price is going. the chinese are dumping their dollar reserves in case anyone hadn't noticed. when the dollar finally becomes worthless, the chinese don't want to be left holding the bag!
What I wonder about is....since near everything we buy in the US is made in China because labor costs are drastically lower there...how much gasoline can an average Chinese worker buy with the couple of dollars they make a day?
Maybe there are so many of them that even if they only buy a gallon a week for their scooters...that's a LOT of gas, enough to throw off the whole supply/demand thing?
What I wonder about is....since near everything we buy in the US is made in China because labor costs are drastically lower there...how much gasoline can an average Chinese worker buy with the couple of dollars they make a day?
The Chinese have a HUGE savings rate, and their currency is appreciating against the dollar. That is making them wealthier and us poorer. Additionally, their labor is becoming increasingly expensive and thus import prices will increase to compensate.
Location: Sitting on a bar stool. Guinness in hand.
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Quote:
Originally Posted by car54
What I wonder about is....since near everything we buy in the US is made in China because labor costs are drastically lower there...how much gasoline can an average Chinese worker buy with the couple of dollars they make a day?
Maybe there are so many of them that even if they only buy a gallon a week for their scooters...that's a LOT of gas, enough to throw off the whole supply/demand thing?
Most people in this country of 1.3 billion do not own a car. For example, in Beijing, a city of 16 million people, there are just slightly more than 3 million cars.
But car ownership in China has grown by 300 percent in just six years. The capital's roads and intersections were not designed to cope with such an influx.
Not taking consumer price factors into account, the average annual salary of employees in China reached 21,001 yuan (US$2,761) last year from 12,422 yuan in 2002, a 12 percent year-on-year increase or 2.8 percentage points higher than the growth rate of per capita gross domestic product (GDP).
Gasoline in the U.S. now sells for around $4 per gallon, but it sells for $2.49 per gallon in China.
Now I don't know if the average Chinese worker has to pay any thing significant in rent and or for food. But from the look of the first article where car owner ship is up 300% it probably not that much. I think the days of only bicycles and mopeds are coming to a close there. But we will have to see how much the chinese government pulls back on government subsidies.
If you want to get out of the game, you actually have to quit playing.
That sentence is so true Philip T! But "we the people" don't want to give up our driving styles to force the reduction in price of gas by keeping our money more in our pockets. It is easier to blame big oil, our govie and foreign countries. Accountability in America seems to have been throw out the proverbial window in a lot of areas of our culture.
Supply and demand means nothing to most folks in America because we have lived high on the hog too long.
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